The Accounting Standards Board has unveiled plans to clear up the ‘dog’s dinner’ of the profit and loss account, in a radical overhaul of the way UK companies report that could take effect by the end of next year.
Under the plans, launched today, a single performance statement will replace the current profit and loss account and statement of total recognised gains and losses, thereby combining all losses and gains incurred by a company in one place in the accounts.
The statement will be split into three parts covering the results of trading activities, the results of financing and other treasury activities, and other gains and losses.
ASB chairman Sir David Tweedie said: ‘The single statement proposed will give users all the information on similar gains and losses of the period in one place, allowing them to select those components of financial performance to which they attach most importance. Profit from the sales of widgets will be shown quite distinctly from sales of factories or derivatives trading.’
Tweedie added: ‘No longer will the profit and loss look
like a dog’s dinner – the meat and two veg will be clearly distinguished.’
The ASB is planning to introduce the new rules by rewriting of FRS3.
However, it is asking first for comments on the plans which have been published in a discussion paper entitled: ‘Reporting Financial Performance: Proposals For Change.’
It has developed the plans in cooperation with other members of the international standard-setting body G4+1, which includes the UK, the US, Australia, Canada and New Zealand, where the plans are also to be introduced over the next few weeks.
The plans could become a factor in the developing supremacy battle between international standard setters.
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